Atlanta can’t keep tech startups (Washington: sales, real estate, credit)

[jhtrico1850]

http://atlanta.bizjournals.com/atlanta/stories/2009/10/05/story2.html?b=1254715200^2193151

In a gulp-inducing finding, a study by a Georgia Tech professor shows 40 percent of high-tech startup companies quit Atlanta within three years of raising their first institutional money. The irony is Atlanta leads the nation in having infrastructure — think research universities and educated labor — to birth high-tech startups, the study found.

Instead of building great high-tech companies, Atlanta has become a feeder system for great high-tech companies in other states, Breznitz said. Atlanta is in danger of becoming a “huge incubation center and the success will be reaped by California and New York,” he said.





Thoughts?Maybe California's terrible economy will make that less of a factor ?

[waronxmas]

Originally Posted by jhtrico1850

http://atlanta.bizjournals.com/atlanta/stories/2009/10/05/story2.html?b=1254715200^2193151

In a gulp-inducing finding, a study by a Georgia Tech professor shows 40 percent of high-tech startup companies quit Atlanta within three years of raising their first institutional money. The irony is Atlanta leads the nation in having infrastructure — think research universities and educated labor — to birth high-tech startups, the study found.

Instead of building great high-tech companies, Atlanta has become a feeder system for great high-tech companies in other states, Breznitz said. Atlanta is in danger of becoming a “huge incubation center and the success will be reaped by California and New York,” he said.




Thoughts?Maybe California's terrible economy will make that less of a factor ?

LOL! Tech start-ups are so 1990s. Back then Atlanta was a great place for these types of companies (Mindspring being the greatest example), but given what happened when the bubble burst in 2001 this isn't a great loss. The world has moved on. As much as I miss them, the heyday of Internet companies has come and gone.

[straightfromatown]

Originally Posted by jhtrico1850

The irony is Atlanta leads the nation in having infrastructure — think research universities and educated labor — to birth high-tech startups, the study found.

While there are great universities here, graduates will follow the jobs. From an employer's perspective, why would they stay in a place with crappy government and high taxes when they could move somewhere more favorable to their companies? Especially given the job market now, they can move to a place with no taxes and the employees will follow.

[AcidSnake]

You mean those same "high taxes" that subsidizes great universities like Georgia Tech and the University of Georgia in the first place? Yeah... okay, guy...

I wonder why places like Alabama with its dependency on regressive sales taxes isn't experiencing a great boom in tech company star-ups, or ANY startups at all? Care to take a stab at that one big guy?

Originally Posted by straightfromatown

While there are great universities here, graduates will follow the jobs. From an employer's perspective, why would they stay in a place with crappy government and high taxes when they could move somewhere more favorable to their companies? Especially given the job market now, they can move to a place with no taxes and the employees will follow.

[RainyRainyDay]

Not to mention that according to the original story, the successful start-ups don't move to "a place with no taxes." Quite the opposite, they allegedly move to California and New York.

Could it be that some folks - even very smart ones who start successful high-tech businesses - perceive the quality of life to be better in a place with higher taxes?

[Mishap]

I'm not completely certain of the % but a large number of GT grads are immediately lured from the state by companies w/ far higher salary structures than Atlanta and Georgia can offer. As it is Georgia is very tax friendly compared to California or New York but in terms of high paying jobs they lead us significantly. It's kind of sad if we drop all this money on our flagship schools in order for other states to benefit. If companies like Microsoft and Google pick out our best and brightest, it'd be nice if we could get them to open up a shop here vs. shipping them and their high salaries to Washington or California.

I went to a GT job fair recently and probably a majority of the companies had minimal if any offices in Georgia. Sure a lot of the grads have family here and come back often but if we wind up a net exporter of top grads, then the state is throwing money away despite investing so much to build up our top schools. Given how long the lines for companies accepting H1-B's were, I'd venture we should improve that system allowing them to immigrate as long as they're producing net jobs here (too bad it's under federal control). It goes directly against my ability to command a higher salary (if there's more competition from foreigners) but it beats educating them in our best technology and shipping them home. At least here they'd be paying taxes and building roots and commanding US level salaries.

Purdue has been offering tons of cash to tech companies...just look at the NCR HQ and ATM plant move. Unfortunately, moving their back offices and an ATM plant (after shutting down 2 others) here hasn't really generated as many jobs as they pretend to have. NCR has a long history of endless RIF's and the people moving here likely aren't that closely attached. By the time the tax break is gone, I'm sure NCR will be shopping for that next tax break fix. I personally think they should restructure the credit to directly provide jobs for fresh grads or be more specific for things like R&D which tend to be harder to move and require more highly trained staff.

In the end drawing jobs like manufacturing simply don't work out all that well b/c the plants can be moved fairly easily once the tax breaks dry up, workers unionize, or we add more free trade partners that have hourly wages that are well under $1. Just ask how Detroit's doing w/ their highly skilled manufacturing workforce. Regardless of their union affiliation, they're still probably better at building things on an assembly line than most people. They've also got some very good schools up there and thousands of top engineers the car companies were hiring there for decades but w/ the huge drag of disappearing manufacturing jobs, the place won't right itself.

[straightfromatown]

Originally Posted by AcidSnake

You mean those same "high taxes" that subsidizes great universities like Georgia Tech and the University of Georgia in the first place? Yeah... okay, guy...

I wonder why places like Alabama with its dependency on regressive sales taxes isn't experiencing a great boom in tech company star-ups, or ANY startups at all? Care to take a stab at that one big guy?

Alabama is not a good example, they have fairly high taxes as well. Take a look at the lists of business friendly states, states where entrepreneurs often start new companies, you will find that most of them have low taxes.

The 7 Best States to Start a Business - US News and World Report

Consider if you were starting a new business in the current economy. You can go to pretty much any state and find employees with ease. Graduating college students are looking for work anywhere, and will move to you if it means they will get a job. Given those circumstances, would it be wise to set-up in a state with low taxes, where you keep more of your profits, or a state with higher taxes, where the government will take more and use it for who knows what? I feel I make the best decisions with my money and I'd like to keep it. If your business has restrictions that require that it be in a certain state then that is understandable. But many tech start-ups can be run anywhere- even outside the US. For many owners of these types of companies moving to a low tax state can mean a 5-10% increase in their bottom line. I think that if Georgia were to lower or remove its personal income tax we would see more of these businesses in Georgia, which would be a great thing for all of us who live here.

[fil]

Much of the move revolves around investors--mainly angel and series A and B funding. In my time in Atlanta, much of the investment money was not there and difficult to obtain while Silicon Valley garnered much more prudent, but conscientious investing. Simply said, Atlanta investors do not have the risk tolerance to support high tech startups and many companies move closer to where the money is available.

[Mishap]

Originally Posted by fil

Much of the move revolves around investors--mainly angel and series A and B funding. In my time in Atlanta, much of the investment money was not there and difficult to obtain while Silicon Valley garnered much more prudent, but conscientious investing. Simply said, Atlanta investors do not have the risk tolerance to support high tech startups and many companies move closer to where the money is available.

That's self fulfilling...the internet billionaires of yesterday fund the startups of tomorrow. Without Paypal, we wouldn't have Youtube or Tesla. It's a high risk model and unless everyone is flush w/ ridiculous amounts of cash and at least a slight understanding of technology you don't chase tech startups.

Georgia instead had thousands of self-styled real estate moguls and like minding bankers. The hundreds of unfinished developments and dozens of failed banks demonstrate that there was no lack of aggressive risk taking in GA. I guess they all figured that real estate was the no risk game compared to funding a few startups here and there.

[ramblinwreck17]

Originally Posted by waronxmas

LOL! Tech start-ups are so 1990s. Back then Atlanta was a great place for these types of companies (Mindspring being the greatest example), but given what happened when the bubble burst in 2001 this isn't a great loss. The world has moved on. As much as I miss them, the heyday of Internet companies has come and gone.

"Tech start-ups" encompass a vastly larger array of companies than just "internet" companies like Mindspring or AOL or Netzero.

The bubble burst because price to earnings ratios on the stock prices of tech companies were through the roof. They had to come back down to Earth.

I would agree that the world has moved on from "internet" companies but the technology age of our US industry is only beginning. Wait till you see some of the stuff google is coming out with. The "tech" companies over the next decade are going to cure cancer, find new energy sources and connect people like we cannot imagine currently. The fact that Atlanta cannot hold on to tech company start ups should be disturbing.